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U.S. Securities and Exchange Commission

Speech by SEC Staff
Opening Remarks before the Commission Open Meeting — Interactive Data


Mark W. Green

Senior Special Counsel (Regulatory Policy)
Division of Corporation Finance
U.S. Securities and Exchange Commission

Washington, D.C.
December 17, 2008

Good morning. Today we are recommending that the Commission publish a release that would adopt amendments requiring companies to provide to the Commission financial statements in interactive data format using eXtensible Business Reporting Language, or XBRL. The new rules would apply to domestic and foreign companies using U.S. GAAP and, eventually, to foreign private issuers using International Financial Reporting Standards as issued by the International Accounting Standards Board.

The Commission received 79 comment letters on the proposed version of the amendments, most of which supported the concept of providing interactive data but addressed various aspects of implementation, including timing. We believe the draft adopting release we recommend responds to a number of these comments.

Interactive data would be required with a company’s periodic annual and quarterly reports, transition reports for a change in fiscal year, reports on Forms 8-K and 6-K that contain updated or revised versions of financial statements that appeared in a periodic report, and Securities Act registration statements. The interactive data also would be required to be posted on the company’s corporate website, if it maintains one. The disclosure in interactive data format would supplement, but not replace or change, disclosure using the traditional electronic filing formats of ASCII or HTML.

More specifically, the new rules would require that companies provide to the Commission a new exhibit with their financial statements, including the footnotes and schedules to the financial statements, in interactive data format. To create the interactive data files, companies would be required to define, or “tag,” their financial statements using elements and labels from the appropriate standard list of tags.

The face of the financial statements would be tagged in each filer’s first year of interactive data reporting. The financial statement footnotes and financial statement schedules also would be tagged in each filer’s first year, but in block text only. After the first year of such tagging, a filer also would be required to tag the detailed disclosures within the footnotes and schedules. In a change from the proposal, tagging of narrative disclosures would be permitted but not required.

The phase-in schedule would apply to three groups of companies.

In year 1, the new rules would apply only to domestic and foreign large accelerated filers that use U.S. GAAP and have a worldwide public float above $5 billion, which we estimate would cover approximately 500 companies.

In year 2, all other domestic and foreign large accelerated filers using U.S. GAAP would be subject to interactive data reporting.

In year 3, all remaining filers using U.S. GAAP, including smaller reporting companies, and all foreign private issuers that prepare their financial statements in accordance with IFRS as issued by the IASB would be subject to the same interactive data reporting requirements.

We recommend a phase-in schedule that gives companies more time than the schedule proposed earlier this year, and first requires most companies to begin filing interactive data with their quarterly reports on Form 10-Q. Specifically, we recommend that the initial group of approximately 500 companies be subject to interactive data reporting beginning with the first quarterly report on Form 10-Q or annual report on Form 20-F or Form 40-F, as applicable, for fiscal periods ending on or after June 15, 2009. For a calendar year-end company, the first required interactive data would be in connection with its June 30 Form 10-Q. After the phase-in period, new public companies would begin filing interactive data with their first quarterly report on Form 10-Q or annual report on Form 20-F or Form 40-F.

Interactive data would be required to be provided to the Commission, and posted on company websites, at the same time as the related report or registration statement, with two exceptions. A 30 day grace period would be permitted for the first interactive data exhibit of each filer, and also for the first interactive data exhibit that is required to include the footnotes and schedules tagged in detail. Information posted on company websites would be required to remain on the website for 12 months.

Filers that do not provide or post required interactive data on the date required would be deemed not current with their Exchange Act reports and, as a result, would not be eligible to use short form registration and would not be deemed to have available adequate current public information for purposes of the resale exemption safe harbor provided by Rule 144 until they make the required filing or posting.

The proposed rules reflect our effort to help assure reliability of the data while not imposing undue burdens on companies. Data in the interactive data file submitted to us would be subject to liability similar to that of the voluntary program and, as a result, would be subject to only limited liability but, in a change from the amendments proposed, the limited liability provision has been streamlined and would be phased out over a two-year period for each company. In addition, the limited liability provision would terminate completely on October 31, 2014. As proposed and as recommended for adoption, interactive data files would be excluded from the officer certification requirements under the Exchange Act rules, and issuers would not be required to obtain auditor assurance on their interactive data exhibits.

We recommend that companies that are not required to provide interactive data until a later time have the option to do so earlier. The existing voluntary program would be modified to exclude non-investment company participation but continue to permit investment companies to participate.

Thank you. We would be happy to answer any questions that you have.



Modified: 12/17/2008